Recent advances within the dynamic capabilities view emphasize the “sensing” of
employees as an important part of the micro-foundations of dynamic capabilities: By
putting in place organizational processes that mobilize and exploit information gathered
by individual employees from their operating environment, firms can update insights
about performance outcomes and improve strategic decision-making. We test empirically
the extent to which firms can ascertain performance outcomes by drawing on employee
knowledge. Our empirical setting is the Scandinavian hospitality sector with respondents
among frontline service employees. Using a time series approach, we show that
employee respondents (collectively) assess medium-term organizational performance
better than management and the financial models available to them.